cbi policy intelligence: flegt · the actual situation in bolivia and develop a kind of action plan...

S-FOR-S: CBI FLEGT Bolivia, Final Report 15/06/12

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CBI Policy Intelligence: FLEGT

FLEGT, VPA, EUTR and their possible impact on the Bolivian timber sector

Final Report

June 15th 2012

S-FOR-S

Christopher Carden

Robbert Wijers

Paul Zambon


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Acknowledgements

The mission would like to thank CBI in the Netherlands and their partners in Bolivia (CANEB y CADEX) for having taken the

initiative for this study. Further the mission would like to thank CANEB, CADEX, CFB and the Royal Dutch Embassy in La Paz

for their support in the preparation and facilitation of the study. Last but not least the mission would like to thank the

representatives of the EU, the Government of Bolivia, the donors, the institutions, the NGO’s and the private sector in Bolivia

and in the EU for their kind collaboration and openness in the respective interviews.

Cover photo: Interviewed Bolivian entrepreneur in his showroom.


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Executive summary

This study was developed at the request of the Timber Task Force (TTF) in Bolivia and its ally in The Netherlands, the Centre

for the Promotion of Imports from developing countries (CBI). The reason behind it was the fear that from the introduction of

the EUTR in March 2013 there would be no possibility of continuing exporting Bolivian timber (products) to the EU market,

without there being a signed Voluntary Partnership Agreement (VPA). Therefore the objective of the study was to inventory

the actual situation in Bolivia and develop a kind of action plan that would enable the achievement of a functional VPA within

a year. S-FOR-S formed a team of consultants to implement a desk study (internet, document review) and a field mission

(discussions, interviews, observations). Both in Bolivia and in the EU a series of companies involved in the trade of Bolivian

timber (products) and other relevant stakeholders of the sector were interviewed.

The forestry sector (NTFP’s and timber (-products)) is important for the Bolivian economy, as the contribution to the GNP is

approximately 3 %. It should be much higher, due to the illegal logging problem, which is estimated at approximately 50% of

the total harvested volume. In addition, the formal forestry sector contributes approximately 4 % to the national

employment. In 2011 the forestry sector contributed 8.8 % to the total export value of Bolivia; whereas Brazil nut (“castaña”)

was the principle forest export product, timber (products) contributed 3.2% to the total export value, with an amount of US $

85.1 million.

The EU market is the most important one for Bolivia in terms of export value (covering one third of that value). The export

value to the EU has increased by approximately 450 % over the last decade and is characterized by high added value. The US

market diminished during the same period, while the Chinese market increased by an even higher percentage, but with much

less added value. On the other hand, Bolivia is not a major provider of tropical timber (products) to the EU market, with less

then 1 % of the total value of tropical timber imported to the EU.

An important part of the stakeholders of the forestry sector in Bolivia is not well informed on the concepts of and processes

related to FLEGT, VPA and EUTR. There is a lack of information in general and there are many misunderstandings. During the

field mission the necessary explanations were given to the contacted people. Nonetheless an information campaign is

required to prepare the sector in general for the introduction of the EUTR. The TTF may play an important role in this sense.

Based on the experiences with VPA processes worldwide and taking into consideration the actual Bolivian context (with an

important informal sub-sector and lack of institutional capacity, among others) it will not be feasible to achieve a VPA in the

short term (within 1 year). However, it seems useful to initiate such a process in order to achieve a VPA in the medium or

long term, provided that the Government of Bolivia (GoB) shows real interest in it. The initiative must be taken by the GoB, as

the GoB itself will be the most important actor, followed by the EU. It is however very important that all other stakeholders

relevant to the sector are involved in the entire process, in order to guarantee the success of the VPA. It is recommended

that the donor platform involved in the environmental sector in Bolivia lend its support to the process.

In the short term the timber sector must focus on other alternatives: 1. the Verification of Legal Compliance (VLC), for

example according to the verification systems of SW/RA or SGS, for companies that export timber legally but which have not

yet been FSC certified or legally verified or 2. the certification of sustainable forest management (SFM), like FSC or PEFC, and

the related CoC, for companies that have previously been FSC certified or currently have a valid certificate. The level of VLC is

lower than the level of SFM (which goes way beyond legal compliance), but it coincides with the level required by the EUTR

and can be reached more easily in the short term by the majority of companies.

In the context of the EUTR, the authorities in the EU will always accept a FLEGT certificate based on a functional VPA (at the

level of a partner country) or a CITES certificate. It is most probable that timber with a VLC or SFM certificate will be accepted

by the due diligence systems of the operators and/or monitoring organizations in the EU partner countries. A third option,

sending proof with each batch to demonstrate compliance with all relevant laws and regulations of Bolivia, appears to be

rather laborious and more risky and therefore does not seem feasible.


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The implementation of a VLC support programme is recommended, focussing, in the short term, on medium sized timber

exporting companies, in order to assure their being prepared for the introduction of the EUTR. At a later stage, a functional

VPA should make it easier for small companies and communities to become exporters also.

Contents

1. Introduction to the CBI FLEGT Bolivia study ............................................................................................................. 9

1.1 Reasons for the study ......................................................................................................................................... 9

1.2 Financing of the study ........................................................................................................................................ 9

1.3 Expected “output” of the study .......................................................................................................................... 9

1.4 Methodology .................................................................................................................................................... 10

1.5 Development of the study ................................................................................................................................ 10

2. Update on FLEGT, VPA and the EUTR ..................................................................................................................... 11

2.1 EU FLEGT Action Plan and VPA ......................................................................................................................... 11

2.2 The EUTR .......................................................................................................................................................... 15

2.3 Activities related to FLEGT in Bolivia ............................................................................................................... 17

2.4 State of knowledge about FLEGT, VPA and EUTR in Bolivia ............................................................................. 17

2.5 State of knowledge about FLEGT, VPA and EUTR in Europe ............................................................................ 18

3. The importance of the Bolivian timber sector to the Bolivian economy ............................................................... 19

4. The EU: a major import market for Bolivian timber ............................................................................................... 21

5. Factors relevant to the current Bolivian context .................................................................................................... 24

5.1 Mistaken perceptions ....................................................................................................................................... 24

5.2 The political situation ....................................................................................................................................... 25

5.3 The institutional situation................................................................................................................................. 25

5.4 Illegal logging and its control in Bolivia ............................................................................................................ 27

5.5 The legal situation of the companies interviewed ........................................................................................... 29

5.6 Forecast effects of the EUTR ............................................................................................................................ 31

5.7 Strengths of Bolivia ........................................................................................................................................... 32

6. The relevance of a VPA for Bolivia .......................................................................................................................... 33


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6.1 Why could a VPA be important for Bolivia? ..................................................................................................... 33

6.2 Thoughts of stakeholders on the possibility of Bolivia signing a VPA .............................................................. 33

6.3 Steps to follow to achieve a VPA in Bolivia....................................................................................................... 35

A. Development of a definition of legality .......................................................................................................... 37

B. Present and discuss the draft definition of legality in the negotiation sessions with the EU ........................ 39

C. Signing of the agreement and ratification by both parties (GoB and EU) ...................................................... 39

D. Preparation of the implementation (development of the LAS) ..................................................................... 39

E. Implementation of the VPA in practice .......................................................................................................... 40

6.4 Financing ........................................................................................................................................................... 40

7. Conclusions and Recommendations ....................................................................................................................... 41

7.1 Conclusions ....................................................................................................................................................... 41

7.2 Recommendations ............................................................................................................................................ 44

List of annexes

Annex 1 Terms of Reference of the mission

Annex 2 Itinerary of the mission

Annex 3 List of people interviewed by the mission

Annex 4 Documents studied by the mission

Annex 5 Impression of concepts of companies in Bolivia on FLEGT, VPA and EUTR

Annex 6 Impression of concepts of companies in the EU on FLEGT, VPA and EUTR

Annex 7 Export value of Bolivia 2001-2011

Annex 8 Detailed information on Bolivian timber (products) export

Annex 9 Forest map of Bolivia

Annex 10 Steps and activities for the development of a VPA in Bolivia (checklist)

Annex 11 Example of a table for the presentation of a legality definition of a VPA


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List of abbreviations

ABT Forest and Land Authority (Autoridad de Fiscalización y Control Social de Bosques y Tierra)

AFP Pension Fund Administration (Administración de Fondos de Pensiones)

AFIN National Indigenous Forestry Association (Asociación Forestal Indígena Nacional)

ASL Local Community Association (Asociación Social de Lugar)

BSO Business Support Organization

BVC Bureau Veritas Certification (certification body)

CANEB National Export Chamber of Bolivia (Cámara Nacional de Exportadores de Bolivia)

CADEFOR Amazonian Forestry Development Centre (Centro Amazónico de Desarrollo Forestal)

CADEX Export Chamber of Santa Cruz (Cámara de Exportadores de Santa Cruz)

CAMEX Export Chamber of La Paz (Cámara de Exportadores de La Paz)

CBI Centre for Import Promotion (Centrum voor de Bevordering van de Import; The Netherlands)

CoC Chain of Custody

CFB Forestry Chamber of Bolivia (Cámara Forestal de Bolivia)

CFO Forest Origin Certificate (Certificado Forestal de Origen)

CITES Convention on International Trade in Endangered Species

CUC Control Union Certifications (certification body)

DA Designated Authority (EU)

DD Due Diligence

DDS Due Diligence System

DGIS Dutch Development Cooperation (Directoraat Generaal Internationale Samenwerking)

ECP Export Coaching Programme (CBI programme)

US United States

EFI European Forest Institute

ETTF European Timber Trade Federation

EU European Union

EUTR European Timber Regulation


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FAN Fundación Amigos de la Naturaleza (NGO)

FAO Food and Agriculture Organization of the United Nations

FCBC Fundación para la Conservación del Bosque Chiquitano (NGO)

FLEGT Forest Law Enforcement, Governance and Trade (EU programme)

FMP Forest Management Plan

FSC Forest Stewardship Council (SFM certification system)

GFTN Global Forest & Trade Network (WWF programme)

GNP Gross National Product

GoB Government of Bolivia

GPS Global Positioning System

ha hectare

IBCE Bolivian Institute for Foreign Trade (Instituto Boliviano de Comercio Exterior)

IBIF Bolivian Institute for Forestry research (Instituto Boliviano de Investigación Forestal)

IBNORCA Bolivian Standards Institute (Instituto Boliviano de Normalización y Calidad)

IICA Inter-American Institute for Agricultural Cooperation (Instituto Interamericano de Cooperación Agrícola)

IMAFLORA Instituto de Manejo e Certificação Florestal e Agrícola (certification body)

IMÖ Institut für Marktökologie (certification body)

IMO Independent Monitoring Organization (in partner country)

INE National Statistical institute (Instituto Nacional de Estadísticas)

JIC Joint Implementation Committee

LAS Legality Assurance System

MO Monitoring Organization (in the EU)

NA Not Applicable

NGO Non Governmental Organization

NIT Tax Identification Number (Número de Identificación Tributaria)

NFLU National FLEGT Licencing Unit

NLVS National Legality Verification System

NTFP Non Timber Forest Product

NTTA Royal Dutch Timber Trade Association

OLB Origine et Légalité des Bois (legality verification system of BVC)


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OP Operator (= first company in the supply chain placing timber on the EU market)

PEFC Programme for the Endorsement of Certification Systems (SFM certification system)

POAF Annual forest operation plan (Plan Operativo Annual Forestal)

Ref Reference to

SENASAG National Phytosanitary Service (Servicio Nacional de Sanidad Agropecuaria e Inocuidad Alimentaria)

SFM Sustainable Forest Management

S-FOR-S Sustainable Forest Services (Servicios Forestales Sostenibles; consultancy firm)

SGS Societé General de Suisse (certification body)

SNV Stichting Nederlandse Vrijwilligers (Dutch Volunteer Service; NGO)

SW/RA SmartWood / Rainforest Alliance (certification body)

TAA The Amazon Alternative (NGO)

TBI Tropenbos International (research organization)

TGN National Treasury (Tesoro General de la Nación)

TLTV Timber Legality and Traceability Verification (legality verification system of SGS)

TNC The Nature Conservancy (NGO)

ToR Terms of Reference

TTF Timber Task Force (forum of the Bolivian timber sector coordinated by CADEX)

UAGRM Universidad Autónoma Gabriel Rene Moreno (Santa Cruz public university)

US-AID US Agency for International Cooperation

VLC Verified Legal Compliance (Verificación Legal Completa)

VPA Voluntary Partnership Agreement (= Acuerdo Voluntario de Asociación - AVA)

WUR Wageningen University and Research

WWF Worldwide Fund for Nature (NGO)


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1. Introduction to the CBI FLEGT Bolivia study

1.1 Reasons for the study

• Concern on behalf of the Bolivian timber sector, expressed through the Timber Task Force (TTF) – a forum

coordinated by CANEB/CADEX - that, as of March 2013, Bolivia would not be able any more to export timber

products to the European Union (EU) market and the perception that the only way to be able to continue the export

of timber products to the EU would be by signing a Voluntary Partnership Agreement (VPA) between the

Government of Bolivia (GoB) and the UE.

• Lack of knowledge on the steps to be followed in order to be able to sign a VPA.

• A concern that it would be necessary to start moving things based on up-dated information in order to urgently take

the necessary measures to achieve the signing of a VPA.

The ToR is presented in Annex 1.

1.2 Financing of the study

• CBI (Centre for the Promotion of Import from developing countries) of The Netherlands (related to the Ministry of

Foreign Affairs, DGIS, The Hague).

• Support Programme to CANEB and specifically to its Export Coaching Programme (ECP) that includes approximately

20 companies of the Bolivian timber sector.

1.3 Expected “output” of the study

• Up-date of information concerning FLEGT, the importance of the timber market for the Bolivian economy, the

importance of the EU market for the Bolivian timber sector and the relevant conditions of the Bolivian context.

• An inventory of the level of preparation of the Bolivian timber sector and the EU timber sector with respect to the

EUTR.

• The importance for Bolivia of signing or not signing a VPA identified.

• An Action Plan indicating the steps to be followed – by the GoB and the stakeholders of the timber/forestry sector –

in order to achieve the signing of a VPA at the short term (within one year)1.

1 Due to the fact that a VPA process always requires more time than just one year, that in addition there is no necessity to achieve it in the short term (as

assumed by the authors of the ToR) and that there are other alternatives by which it would be possible to assure the export of timber (-products) in the

short term, in coordination with CBI, CANEB and CADEX it was agreed to give less importance to the action plan. Instead, more attention has been given to

the description of the real situation and the short term alternatives, while the possible steps to be followed to achieve a VPA are described in less detail.


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1.4 Methodology

• Qualitative and quantitative desk study (using internet, statistics, documents, articles)

• Fieldwork in the EU:

1. Structured interviews with companies that import Bolivian timber – 9 in The Netherlands and Belgium2

2. Institutional interviews – 4 (TBI, EFI, WUR, TAA)

3. Government interviews – 2 (CBI-DGIS in The Hague, UE in Brussels)

4. Participation in the 19th

Illegal Logging Update Meeting, London (9-10/02/12)

5. Participation in a workshop of the NTTA (Royal Netherlands Timber Trade Association) concerning the

preparation of member companies for the EUTR, Almere (22/03/12).

• Fieldwork in Bolivia:

1. Structured interviews with companies that export Bolivian timber – 9

2. Semi-structured interviews of NGO´s – 5 (WWF/GFTN, FCBC, TNC, SNV, FAN Bolivia)

3. Semi-structured interviews with sector/education institutions – 9 (CADEX, CANEB, CFB, IBCE, IBNORCA,

SmartWood/Rainforest Alliance, IBIF, CADEFOR, Universidad de la Cordillera)

4. Semi-structured interviews of GoB – 3 (ABT, Vice Ministry of Environment, Biodiversity, Climate Change

and Forest Development and Management – Forest Development and Management Director, Vice Minister

of Small and Micro Businesses)3

5. Group or individual discussions with donors – 7 (Royal Netherlands Embassy, British Embassy, German

Embassy, Danish Embassy, US-AID, EU Representation, FAO Representation)

6. Participation in a TTF meeting in Cochabamba (10/02/12)

• Data analysis and reporting

1.5 Development of the study

The team formed by S-FOR-S consists of a local consultant in Bolivia (Christopher Carden), a local consultant in the EU

(Robbert Wijers) and an international consultant, team leader (Paul Zambon). The study was implemented between February

and March 2012. The itinerary of the field mission in Bolivia is presented in Annex 2. Annex 3 presents a list of the people

interviewed by the team. With the companies interviewed in Bolivia and in the UE it was agreed that their collaboration

would be anonymous; for that reason neither the names of the companies nor the names of their interviewees are specified.

Annex 4 presents the documents and materials reviewed by the team.

2 Some Bolivian timber (-product) importing companies in England and Germany were also contacted, but these declined to collaborate with the interview.

3 An interview with the Cancillería (Ministry of Foreign Affairs) was cancelled; however the team did manage to meet with a Special Advisor to the

Cancillería.


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2. Update on FLEGT, VPA and the EUTR

2.1 EU FLEGT Action Plan and VPA

The FLEGT (Forest Law Enforcement, Governance and Trade) Program4 of the EU, also known as the EU FLEGT Action Plan,

started in 2003 with the aim of contributing to the eradication of illegal logging in producer countries as well as combating trade in associated timber (products). Finally, the FLEGT Program is intended to contribute to sustainable forest management by stimulating legal management, by eliminating unfair competition by the illegal trade and by enabling Governments of producer countries to obtain the tax income they are supposed to derive from legal transactions, amongst other objectives.

The EU FLEGT Action Plan focuses mainly on improving governance structures, policy reforms, improved transparency and information exchange, capacity building, and the promotion of legal timber. The action plan proposes voluntary bilateral agreements between the Governments of producer countries (FLEGT Partner Countries) and the EU. These Voluntary Partnership Agreements (VPA’s) set out commitments to action by both parties to tackle illegal logging (FLEGT Briefing note 1, 2007). Through a VPA the EU and a partner country agree to establish and maintain the necessary structures to assure that timber (products) exported by that country with a so-called FLEGT license guarantee that all relevant laws of the producer country are complied with. The most important element of a VPA is the Legality Assurance System (LAS), which sets out the procedures by which a producer country will ensure that timber and timber products originate from legal sources (EFI, 2010). The definition of legality

5 is the basis of the system and depends on the specific legal context in the producer country.

It is important to understand that a VPA is not a law but a voluntary agreement between the EU and the producer country’s

government. That means that without a VPA, exports of timber and timber products to the EU can continue as long as the

export documents meet the import requirements of the EU.

The LAS consists of 5 elements that are interlinked: 1. the Legality Definition (this defines the legislative and regulatory requirements to be systematically fulfilled and verified without any exception to ensure legal compliance); 2. Control of the supply chain (this refers to a timber tracking system that, firstly, enables the operator to demonstrate that timber is from a legal source and, secondly, covers the entire supply chain (Chain of Custody; CoC) from the point of harvest to the point of export; 3. Verification system (this refers to a set of procedures and processes to systematically check compliance with the requirements of the Legality Definition and the CoC); 4. National Licencing system (a system by which a designated authority in the producer country issues FLEGT licences for timber (products) thus confirming that these have been legally produced; 5. Independent Monitoring (an independent 3

rd party is used to check that all aspects of the LAS function as intended).

The scheme (Figure 2.1) is applied equally in all VPA partner countries worldwide. A Joint Implementation Committee (JIC, consisting of representatives of the partner country and the EU) is responsible for the bilateral control of the VPA, once in operation. It is informed by (at least) the half-yearly reports of the independent monitoring organization. The JIC may require adjustments of the LAS and may annul the VPA if the LAS does not function to its satisfaction.

4 The FLEGT Action Plan covers a range of activities, that focus on 7 broad areas: 1. support to timber producing countries; 2. activities to promote trade in

legal timber; 3. promotion of public procurement policies in EU countries; 4. support for private sector initiatives; 5. safeguards for financing and

investment; 6. use of existing legislative instruments or adoption of new legislation to support the Plan; 7. addressing the problem of “conflict timber”.

5 Although the definition of legality depends on the legal context (laws, regulations, ratified international treaties, etc) of the producer country and full legal

compliance is aimed for, at least the following elements shall be addressed: a. right to harvest timber within legally gazetted boundaries; b. payments for

harvest rights and timber, including duties related to timber harvesting; c. timber harvesting, including environmental and forest legislation, including forest

management and biodiversity conservation, where directly related to timber harvesting, d. third parties legal rights concerning use and tenure that are

affected by timber harvesting; e. trade and customs as far as the forest sector is concerned.


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Figure 2.1: General institutional arrangement for a VPA.

The path to a functioning VPA consists of several phases (Figure 2.2): a. pre-negotiation (preliminary information exchange and assessment of relevance and mutual interest); b. negotiation (processes, including wide stakeholder consultation

6, to

establish the definition of legality; awareness creation; negotiations within and between stakeholder groups; study of legal context; identification of needs for reforms; definition of legality, where possible by consensus); c. signing (official ceremony) of the VPA (which describes the legality definition and the required reforms, where applicable, and a detailed plan that sets out time bound actions for improving forest sector governance and implementing the licencing scheme) and ratification (by the partners and EU Parliament); d. preparation for implementation (assuring that the different elements of the LAS are in place and fully operational); e. implementation (this will only happen after field testing has indicated that the system is functioning well in practice and will cover implementation of the different tasks, including issuance of FLEGT licenses by the competent authority to companies that comply with legal requirements, and monitoring).

6 This process allows stakeholders the opportunity to provide their input, raise their concerns, and provide suggestions on the content of the definition of

legality of timber and timber products. Stakeholders can be defined as groups that are directly involved in or affected by forestry operations. Stakeholders

are, for example, forest services, government agencies, community members, forest companies, and NGOs (EFI, 2010). The stakeholder consultation process

in the producer country is the most difficult process due to the fact that in most producer countries there is not a strong tradition of this type of consultation

(personal note J. Bruneval, 2012).


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Figure 2.2: Phases of the VPA process.

To date, six VPA’s have been signed and ratified (Indonesia, Ghana, Cameroon, Congo, CAR, Liberia) while another 4 are in negotiation (Malaysia, Gabon, DRC, Vietnam). These countries are amongst the major suppliers of tropical timber (products) to the EU; not one Latin American country is included

7 yet. Figure 2.3 indicates the time required for the VPA negotiations

and the preparation for implementation. It should be noted that while the process so far has taken between 3 and 6 years, not one of these VPA’s has yet reached the implementation phase; in other words, the preparation process is still on-going. It is questionable whether any of the VPA’s (signed and/or in negotiation) will be functional by March 3

rd 2013, i.e. there is a big

chance that at that time no timber with a FLEGT license will actually be available.

7 Preliminary meetings and/or workshops to explore the potential for negotiation of a VPA have been held in Honduras, Guatemala, Colombia, Guyana and

Brazil. Recently (on May 15th 2012) Honduras decided to start negotiations. Guyana has expressed its serious interest to do so, while Brazil indicated not to

be interested. In the other countries so far pre-negotiation activities have not lead to the decision to establish formal negotiations.


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Figure 2.3: An overview of the FLEGT process in different countries (EU PowerPoint presentation, Chatham House Meeting, February 2012).

Lessons learned8 within the framework of VPA negotiations:

• Every country is different, so there is no blueprint

• It is always a difficult process

• The VPA content depends on the quality of the process

• The most important negotiation is the internal one, i.e. inside the producer country, not the one with the EU

• Preparatory activities are most important to enable consensus building at national level

8 Personal communication EU representatives, February 2012.


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2.2 The EUTR

The EUTR (EU Timber Regulation) will become effective on March 3rd

2013. The EUTR is a law that has been approved by the EU Parliament; it has 3 elements:

a) Prohibition. EUTR prohibits operators9 from placing illegally harvested timber (products) on the EU market. The definition

of legality is based on the legal context of the producer country (country of origin).

b) Due Diligence System. EUTR requires operators to apply Due Diligence (DD) either by themselves or by associating with a Monitoring Organization (MO) that applies a DD system. DD comprises three steps: 1. operators shall provide access to information concerning the timber, such as country of harvest, concession, species, sizes, quantities; 2. they shall implement a risk assessment procedure to evaluate the risk of occurrence of illegally harvested timber or timber products; 3. if the risk of illegally harvested timber (products) is deemed not to be negligible, operators shall implement risk mitigation measures and procedures to minimize risk.

c) Traceability Obligation. EUTR requires that (internal) traders apply a tracking system, providing basic information to enable identification of their suppliers and clients (1 step in both directions).

Since the EUTR is a law that has been approved by the EU Parliament, it is clear that it will not be postponed (personal note J. Bazill, 2012). The EU border will not be closed; however, mechanisms will be in place to ensure an effective control of timber placed on the EU market. These mechanisms include the establishment of a functional control system in each of the EU member states (Figure 2.4), the necessary changes to laws and regulations in the EU member states (e.g. with respect to prosecution in case of non-compliance) and the development of arrangements to harmonize implementation between the EU member states. Each EU member state will designate the responsibility for control to a Competent Authority that will control both individual operators and MO’s. In the latter case, the MO’s in turn exert control on the operator through their DD system. Although the burden of proof is with the Competent Authority, in all cases the operator remains responsible for compliance with the law.

The process of definition of EUTR implementation and delegation mechanisms is still on-going. The final version is expected to be completed in June 2012.

As indicated above the EUTR sets requirements for operators IN the EU, not for exporters TO the EU. This enables EU designated authorities to exert effective control on implementation and - in case of non-compliance - prosecution

10. It is

clear, though, that operators in the EU will require their business partners overseas to provide them with the information necessary to enable them to comply with the requirements of the EUTR.

9 “Operators” are the first individuals or organizations in the supply chain that place timber and/or timber products on the internal European market, either

timber produced within the EU or imported to the EU.

10 Prosecution is defined at the level of the Member Countries. For example in the case of The Netherlands new legislation is being prepared to enable the

prosecution of infringements of the EUTR. The expected punishments include fines up to 750.000 € and imprisonment.


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Figure 2.4: Institutional arrangement concerning EUTR control for EU member states.

From March 3rd

2013 there will be three options to import timber (products) into the EU:

1) By use of a FLEGT licence when there is a functional FLEGT VPA between the producer country and the EU. Timber

with a FLEGT license will be accepted without any additional information by any member state of the EU. Likewise,

in the case of a CITES11

certificate, the EU will not require further information in order to accept the timber

(products). In the long term this is the easiest way to prove the legality of timber (products).

2) By use of a recognised 3rd

party certification and/or verification schemes. Examples of such certification schemes for

sustainable forest management are FSC and PEFC; examples of legality verification schemes are the VLC (Verification

of Legal Compliance) system of SmartWood/Rainforest Alliance, the TLTV12

-VLC system of SGS and the OLB (Origine

et Légalité des Bois) system of BVC. A common misunderstanding is that an FSC certificate is synonymous with

meeting all the requirements of the EUTR. There is and will not be a direct relation between EUTR and the FSC

certificate (personal note S. Atanasova, 2012). This means that the EU will not define a “green lane” for certain

certification/verification systems. Instead, through the EUTR, the EU will establish a functional control system on the

basis of due diligence, thus enabling its users to determine whether a certificate of a certain certification/verification

system in a particular country will suffice to ensure legality. Thus, being in possession of an FSC, PEFC or a VLC

certificate will most probably be helpful in complying with the EUTR requirements. In the short and medium term it

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Convention on International Trade of Endangered Species.

12 Timber Legality and Trade Verification.


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is expected that independent 3rd

party certification/verification will be the most practical way to prove compliance

with local legality requirements and the EUTR.

3) By supplying all necessary information to demonstrate the legality of timber (products) scheduled for

export to the EU. This involves proofs of legality relevant to the particular producer country and would in

principle apply to every batch or at best to every supplier. This option appears to be relatively time

consuming and complicated and is therefore considered less practicable.

2.3 Activities related to FLEGT in Bolivia

In April 2010 the FLEGT Facility of EFI (European Forest Institute) made a first mission to Bolivia to collect information

concerning the FLEGT possibilities, inform major stakeholders on FLEGT and assess the level of interest in getting involved in

a VPA process.

Early March 2012 a mission of Steinberger (NTU13

) visited Bolivia (amongst other Latin American countries) to study legal and

illegal timber flows between Latin American countries.

During the first two weeks of March 2012 also the present S-FOR-S mission took place, as described in this report.

In the second part of March 2012 a technical assistance mission (focus: awareness creation and information provision to

stakeholders) was implemented by Didier Devers (EFI-FLEGT Facility).

A follow-up mission (focus: organization of a workshop for Government staff about the FLEGT Action Plan and the EUTR) by

the European Commission, to be implemented by Antoine Saintraint, could be proposed for mid 2012.

The EU exerts neither political power nor pressure on Bolivia to establish a VPA. First of all the VPA is a voluntary agreement.

Furthermore, the purpose of the agreement is to support producer countries in combating illegal logging and trade, while

respecting their sovereignty and legal context. Finally, the quality of the process, especially the stakeholder consultation, is

considered to be very important (personal note Bruneval, 2012). It will be clear that if the ownership of the process is with

the Government and the natural stakeholders in the national setting, the chances of a thorough, high quality process will be

better, thus improving the possibility of a successful VPA.

Considering the actual state of activities on FLEGT developed so far in Bolivia and experiences in other countries, it is quite

impossible that Bolivia could obtain a functional VPA within one year. The process is still in the pre-negotiation phase. It is

not yet clear whether the Bolivian Government will be interested in getting involved in a VPA process. At best, such a process

would take several years to result in an operational VPA.

2.4 State of knowledge about FLEGT, VPA and EUTR in Bolivia

During the field mission in Bolivia different stakeholders were interviewed, one of the issues being the level of knowledge

about and/or understanding of FLEGT, VPA and EUTR.

Annex 5 provides an overview of statements made by interviewees about FLEGT, VPA and EUTR. It is clear that there is a lot

of misunderstanding and confusion and a considerable lack of information on these topics. The mission interviewed 9

companies that produce and export timber (products). The total annual production of these companies amounts to 16.76

million US $, of which 4.51 million US $ (27 %) is exported to the EU market. So the value of products exported to the EU by

13

Mission implemented by NTU-Strategic Development & Consulting, fielded by the EU.


18

the interviewed companies represents 22% of the total value of the Bolivian timber (products) exported to the EU market14

.

Their annual production per company varies from 210,000 US $ to 7 million US $. Exports to the EU by the companies

interviewed vary from 0 to 1.75 million US $. The number of employees per company varies from 23 to 1,060. Of these

companies, approximately 20 % has some idea of what FLEGT is about. Only 10 % is more or less informed on VPA, while

none had adequate information on the EUTR to be able to prepare themselves for its introduction. As source of the

information obtained so far they mentioned CADEX/TTF (3x), CFB (2x), FSC (2x), CBI (1x) and clients in the EU (1x). All

recognized the need for further information.

The mission estimates that overall at most 10 % of the stakeholders interviewed was reasonably informed about these issues.

Relatively best informed were NGO’s and certain service providers, followed by donors and Government representatives.

Basically none of the companies was adequately informed.

2.5 State of knowledge about FLEGT, VPA and EUTR in Europe

Also importers of Bolivian timber were interviewed in Europe. Approximately 15 companies were approached in the most

relevant EU countries, i.e. The Netherlands, Germany, UK and Belgium. Together the companies approached import about

one third (in terms of value) of the Bolivian timber (products) exported to the EU. The German and UK companies were not

willing to cooperate with the interview, so that the text below reflects the answers of the 3 Belgian and 6 Dutch companies15

.

Annex 6 provides an overview of statements made by interviewees on FLEGT, VPA and EUTR. It is clear that the

understanding of these stakeholders is better than that of their colleagues in Bolivia, especially with respect to EUTR: the

idea of the EUTR is clear to all respondents (“it will ban illegal timber from the market”). With respect to FLEGT and VPA

there are major differences: some have no idea what FLEGT and VPA are about, others have all available information.

The mission estimates that approximately 50% of the companies interviewed are sufficiently informed on FLEGT and the

EUTR to be able to prepare themselves for it. In general however they indicated that more clarity is needed on the

requirements for the EUTR (e.g. which certification and/or verification systems will be accepted by the Competent

Authorities and/or Monitoring Organizations). They are generally waiting until such clarity is provided before worrying about

preparing themselves. Only when the requirements are clear will the companies know how the EUTR may affect their

business with Bolivia. Some respondents see an FSC certificate as a way to continue the import to the EU; others state that

forest legislation and control in Bolivia are very strict and functioning well and that therefore it would probably meet the

EUTR requirements.

Regarding the need for a VPA, only one respondent indicated that he considered it to be necessary in order to continue

importing from Bolivia. One third of the respondents in the EU consider that a VPA might be a good option for the long-term.

But most respondents had no clear idea about the VPA concept.

In addition to the interviews with specific companies, a meeting of the Dutch NTTA (Royal Netherlands Timber Trade

Association) regarding the preparation for the EUTR (with a participation of approximately 25 % of the associated importers,

not specifically related to Bolivia) was attended. The impression was that the level of information disseminated and the level

of discussion were good. It appears that the NTTA and the ETTF (European Timber Trade Federation) are seriously preparing

themselves for the EUTR. It has to be stated though that, at the moment, there are still issues under discussion of the EUTR

Implementation and Delegation Acts and that clarity on specific requirements and arrangements is to be expected only after

June 2012.

14

Due to the limited number of interviewed companies, the data concerning these companies, presented here and in the following chapters, shall not be

considered as statistical studies. However, the fact that these companies represent 22% of the total timber (product) export value from Bolivia to the EU

does give an impression of its representativeness.

15 The data concerning the 9 companies that import Bolivian timber (products), interviewed in the EU, neither shall be considered as statistical study.

However, the fact that their totalled import amounts to 34 % of the total timber (product) import value from Bolivia to the EU, does give an impression of its

representative ness.


19

3. The importance of the Bolivian timber sector to the Bolivian economy Bolivia's 2011 gross domestic product (GDP) totalled approximately US $51 billion.

16 The forestry sector contributes about 3

% to the GDP which is estimated at US $ 1.54 billion. This figure is most likely lower than the actual contribution of the sector

to the GDP since it only captured legal timber and Brazil nut (an NTFP) production. Because of the high level of illegality in

the forest sector the contribution is probably higher than 3%. There are estimations that the annual legal and illegal harvest

of logs in 2008 is around 3.5 million m3 (Tuomasjukka et al, 2010). Domestic consumption in 2010 is estimated to have been

approximately 1 million m3 of logs (Cadex, 2011). The value of the timber sector (excluding Non Timber Forest Products -

NTFP’s) was US $ 294 million in 2007 of which 44% was exported and 56% was consumed by the national market

(Tuomasjukka et al, 2010).

There are over 1,300 forestry companies registered with the Bolivian Forest Authority (2011)17

and around 6,000 forest

products production units (sawmills, wood yards, and processing facilities), 70% of which are small or medium sized

businesses (Encyclopaedia of Forestry, 2012) that produce less than 1,000 m3 of timber per year (Tuomasjukka et al, 2010).

According to the Bolivian Chamber of Forests (CFB) the whole timber sector generated a total of 90,000 direct jobs and

160,000 indirect jobs in 2008. The formal timber sector (includes logging and processing) contribute 4.1 % to national

employment (Tuomasjukka et al, 2010). In reality this figure should be higher because of the significant illegality within the

sector. The multiplier effect of the formal timber sector is estimated to be 2.54 which means that every job created in this

sector generates 2.54 other jobs (Tuomasjukka et al, 2010)18

.

According to the data of the CFB, in 2011 the forestry sector (including Brazil nuts and all types of timber product) contributed 8.8% to exports. Of this contribution, the major part (almost 64%) comprised the export of Brazil nuts. Considering only the timber products, the contribution is 3.2% of all the exports with a value of US $ 85.1 million in 2011. The timber products exported can be divided into two groups: (1) furniture exports (0.4%) and (2) rough sawn timber and processed timber exports (2.8%). Examples of processed timber are decking and profiled timber. Figure 3.1 shows the value and % distribution of the different export categories in 2011. The product group “no traditional exports” covers 57.2% of total exports and refers to products with value added; this includes the hydrocarbon, gas- and oil mining activities.

Figure 3.1: Overview of export distribution percentages of the different Bolivian export categories in 2011. The category “others” includes

sunflower and derivatives, quinua, leather, beans and coffee (based on data of CADEX, 2012).

16

The GDP of Bolivia (in purchasing power parity dollars) varies according to different sources: US $ 51,46 billion (www.cia.gov), US $ 50,9 billion

(www.knoema.com); US $ 51,41 billion (www.wikipedia.com).

17 Personal communication by Ing. Edwin Margariños, CADEX, 2012.

18 More actualized data on employment in the forestry sector than those of Tuomasjukka et al, 2010 are not available.

http://en.wikipedia.org/wiki/Bolivia

http://en.wikipedia.org/wiki/Gross_domestic_product

http://www.cia.gov/

http://www.knoema.com/

http://www.wikipedia.com/


20

Total exports from Bolivia increased by US $ 1,670.3 million between 2001 and 2011 (Annex 7). The main absolute growth

has been in the sector of no traditional exports with a growth of US $ 945.4 million. The export of Brazil nuts also increased

by US $ 120.6 million between 2001 and 2011. Table 3.1 shows the value (US $ x million) growth of the different export

categories and their growth percentages. The data show the relatively slow growth of the timber sector (furniture and rough

sawn timber and processed timber) compared to that of the other export categories. There are many reasons for the slow

growth: the timber sector is very complex being characterized by a variety of products, many different stakeholders, slow

movement of capital, lack of good infrastructure, a need for well educated labourers and domination by small and medium

sized companies. The other sectors are mostly dominated by multinationals (oil and gas, mining, soya bean production) or do

not need any capital input (Brazil nut).

Export categories of Bolivia 2001 2011 Δ $ Δ %

No Traditional products 582.7 1,528.0 945.4 162.3

Soya and derivatives 275.0 665.6 390.6 142.0

Brazil nut 27.7 148.4 120.6 434.8

Others 65.9 245.4 179.5 272.6

Wooden furniture 10.0 11.4 1.4 13.8

Timber and timber products 40.9 73.7 32.8 80.2

Total 1,002.1 2,672.4 1,670.3

Others = Sunflower and derivatives, quinua, leather, beans, coffee.

Table 3.1: Increase of different Bolivian export categories between 2001 and 2011. The change in export value (US $ x million) and the

increase of % compared to 2001 is presented (based on data of the Cadex, 2012).


21

4. The EU: a major import market for Bolivian timber Bolivian timber

19 products are exported to more than forty different countries in the world; estimates of their total value

vary from US $ 85.0 (Cámara Forestal Bolivia, 2012) to 89.3 million in 2011 (Cadex, 2012). At present, the USA and the EU are

the main destinations. In 2011 the value of exports of Bolivian timber products to the EU was US $ 29.5 million which

represents 34.5 % of the total exports (Figure 4.1). Thus the EU market was the most important market for Bolivia. Other

export markets for Bolivian timber (products) include China, Argentina, Chile and Mexico amongst others (Cadex, 2012).

More detailed information is presented in Annex 8.

Figure 4.1: Export of Bolivian timber, timber products and wooden furniture to different parts of the world in US dollar (x million) and

percentages in 2011. “Others” are Argentina, Brazil, Chile, Mexico and some smaller importers (based on data of the Cadex, 2012).

Table 4.1 shows the total value and volume of Bolivian timber (products) exported to the main seven destinations as well as

the average value per metric ton; the latter gives a clear indication of the big differences in value added for each market.

Added values are mostly the result of additional processing of the timber. With such processing, a single piece of timber has a

higher sales value than without such processing. Examples of added value processing are: drying, moulding and production of

flooring or furniture. Exports of timber products to China, Argentina and Brazil have a low value per metric ton which means

that low grades of sawn timber, logs or other low grade timber products are exported to these countries. The export value

/metric ton ratios for the United States, Germany and The Netherlands are very high; this means that the value added to

these products is also very high. Products with a high added value include flooring, furniture, decking and garden products.

The production of high added value goods is desirable because it creates employment in the exporting country. The average

value for timber products exported to the EU is 1,272 US $ per metric ton.

19

Exported timber includes the following species: almendrillo/cumarú (Dipteryx odorata), almendrillo amarillo (Apuleia leiocarpa),

amburana/cerejeira/roble (Amburana cearensis), bibosi (Ficus sp.), cambará (Erisma uncinatum), canelón (Vochysia spp.), cedro (Cedrela spp.), chiriguano

(Simarouba amara), cuchi (Astronomium spp.), curupau (Anadenanthera culubrina), jichituriqui (Aspidosperma spp.), mururé (Clarisia racemosa),

paquío/jatoba (Hymenaea courbaril), toco (Enterolobium contortisiliquum), tajibo/ipé (Tabebuia serratifolia), sauco (Zanthoxylum spp.), serebo

(Schizolobium parahyba), sirari (Ormosia spp.), verdolago (Terminalia oblonga), yesquero negro/cusuru (Cariniana estellensis). The species mara (Swietenia

macrophylla) can only be harvested and traded with a CITES certificate, but is hardly available.


22

Country Export Value (US $)

(x million)

Volume

(metric tons)

Value (US $)

/metric tons

United States 20.61 10,038.66 2,053

China 7.54 29,215.37 258

Argentina 7.37 13,650.69 539

Germany 5.86 4,560.53 1,284

Brazil 5.37 31,798.21 168

The Netherlands 5.36 5,846.25 916

France 5.04 4,128.22 1,220

EU in total 29.50 23,179.32 1,272

Table 4.1: Exports of Bolivian timber products to the seven main destinations and to the EU in total. The export value in US $ (x million), the

volume in metric tons and the value in US $ per metric tons in 2011. Note: total exports were 144,841 metric tons (based on data of INE and

Cadex, 2012).

Bolivia’s timber exports have increased from US $ 50.8 million in 2001 to US $ 85.4 million in 2011 (Table 4.2). The export to

China is the most important increase: from US $ 0.2 million in 2001 to US $ 7.4 million in 2011. Exports to the USA have

declined by 36% to US $ 19.2 million. On the other hand, exports to the EU have increased from US $ 6.6 million in 2001 to

US $ 29.5 million in 2011, equivalent to a growth of 347 %20

. This represents an export volume of 23.2 thousand metric tons

in 2011. Considering the global trends of raw material markets, it is expected that the export of raw materials to both China

and India will increase further in the future. Indian and Chinese purchasers are at the moment not interested in high value

products because processing in their countries is cheaper than in Bolivia. Therefore, in the future, Asian countries may

become increasingly competitive with Bolivian timber products.

Destination /year 2001 2011 Δ $ Δ %

European Community 6.6 29.5 22.9 347.0

United States 30.0 19.2 -10.8 -36.0

China 0.2 7.4 7.2 4525.0

Others 14.0 29.3 15.3 109.3

Total exports 50.8 85.4

Table 4.2: Changing values of timber (products) exported by Bolivia in the period 2001 – 2011 in US $ (x million). “Others” are Argentina,

Brazil, Chile, Mexico and some smaller importers. (Based on data of the Cámara Forestal Bolivia, 2012).

The Bolivian timber industry exports more than 40 different timber products. The four most important export products are

general sawn timber (US $ 15.2 million), sawn timber species of other species21

(US $ 12.1 million), furniture (US $ 10.6

million) and doors and door frames (US $ 8.82 million). These four product categories cover more than 54 % of the total

export. The average value in US $ per metric ton is highest for doors and door frames (US $ 3072.00 /metric ton) and lowest

for general sawn timber (US $ 335.00 /metric ton).

Exports to the EU can be divided into 2 different product groups: (1) sawn timber and processed timber and (2) wooden

furniture. In 2011 the total export value of sawn timber and processed timber was US $ 23.08 million and the export value of

wooden furniture was US $ 6.41 million. The development of exports to the EU of different product groups from 2001 - 2011

years differs between countries (see Figures 4.2 and 4.3). Annex 7 presents the value increase of timber exports to the EU

from 2001 till 2011.

20

CADEX (2011) estimates the export value in 2011 at 29.8 million US $, which represents an increase in value (2001- 2011) of 451 %.

21 Registered as “other sawn timber of species different than conifers”.


23

Figure 4.2: Development of exports of Bolivian timber and processed timber products to the main EU markets in 2001 and 2011 (based on

data of the Cadex, 2012).

Figure 4.3: Development of exports of Bolivian wooden furniture to the main EU markets in 2001 and 2011 (based on data of the Cadex,

2012).

There is still scope for further growth of exports of Bolivian timber products22

to the EU market. During the interviews, the

respondents of importing trading and production companies concluded that Bolivian timber products have already found

their niche on the European market and are used mainly for outdoor end uses. The total value of Bolivian timber (products)

imported by the companies interviewed is estimated at US $ 10.0 million in 2011, which is 33.8 % of total timber (products)

imported by the EU. They consider that the main obstacles to increasing Bolivian timber product exports to the EU are

bureaucracy, small production units compared to production units in other exporting countries, delay in delivery times and,

thus poor contract compliance. According to the respondents an FSC-certificate is positive but not necessary for further

growth. For more extended information concerning the market of Bolivian timber products in the EU, please consult the

Sector Export Marketing Plan (SEMP) of CADEX (CADEX, 2011).

22

Tuomasjuka et al (2010) classify 41 million ha of forest as “permanent production forest” of which approximately 8 million ha are under forest

management. According to CADEX (2011) there are between 20 and 30 million ha of forest with production potential.


24

5. Factors relevant to the current Bolivian context

5.1 Mistaken perceptions

From the start of the study is was clear that - due to lack of adequate information, the very complexity of the topic and its

novelty (certain aspects are still in development) - there were many mistaken perceptions amongst the target group

organizations of the consultancy:

a) That the EU borders will close for the export of tropical timber products in March 2013.

b) That the definition of “legality” is be imposed by the EU.

c) That the signing of a VPA is “a must” for Bolivia.

d) That it would be possible to achieve an operational VPA within a year.

e) That a signed VPA would be the only way to demonstrate legality.

f) That FSC certification would not be acceptable as proof of legality.

g) That the EU would consider a VPA with Bolivia to be very important and would therefore want to “push” its

negotiation.

h) That the introduction of the EUTR would represent a disaster for the Bolivian timber sector.

The real situation is as follows:

Ref. a) The EU border will not close, but from 03/03/13 the EUTR requires that the EU operators only supply themselves

with “legal timber” and put this on the EU market.

Ref. b) The definition of “legal timber” depends on the legal context of the producer country.

Ref. c) The signing of a VPA is totally voluntary; in the case of Bolivia it may be advisable but it is neither “a must” nor

obligatory.

Ref. d) The signing and implementation of a VPA by the GoB is a process that, based on worldwide experiences to date, will

probably not be achieved in less then three years, possibly within six years … or - if the GoB lacks interest in pursuing

the process - never.

Ref. e) In order to comply with the EUTR there are 3 options:

1. FLEGT-VPA certificate (country level certificate; in other words: recognition of the Bolivian FLEGT certificates) or

CITES certificate (internationally recognised certificate); these will always be accepted by the EU authorities, as

they form a part of the EU obligations of the VPA.

2. VLC (Verified Legal Compliance) certificate or a certificate for Sustainable Forest Management (FSC, PEFC);

(certificate at company level); these have a considerable probability of being approved by the Due Diligence

Systems (DDS) of the Operators (OP) or the Monitoring Organizations (MO).

3. Sending of all relevant proof to demonstrate compliance with legality (copies of proof with each exported

batch); this has a chance of being accepted by the DDD of the OP or the MO, provided that the documentation

is complete and convincing.


25

Ref. f) While it is true that the EU will not accept FSC certification directly (“there will be no green lane”), it is expected

that it will be accepted indirectly by the Due Diligence systems of the OP or the MO. This also applies to other

renowned SFM certification and/or VLC verification systems.

Ref. g) The Bolivian contribution to imports of tropical timber to the EU is less than 1 %; Bolivia, as a source of tropical

timber (products) is, therefore, not of major importance to the EU. If the GoB is interested in the VPA process, the

EU is willing to support its development. If such is the case a “thorough process” will be needed, because the quality

of the process determines the success of the VPA. The EU is not interested in imposing anything on anybody.

Ref. h) There are well founded arguments that suggest that the introduction of the European Timber Regulation (EUTR) as

of 3/3/13 could be a great opportunity both for Bolivian timber (products) exporters, especially the certified ones,

and for certification/verification companies.

5.2 The political situation

The GoB promotes a policy of “integrated and sustainable forest management” and another of “eradicating illegality in the

forestry chain”. According to representatives of the GoB interviewed by the mission an initiative like FLEGT/VPA fits well

within these policies and may therefore well be of interest to the GoB. A VPA process could be of special interest to small

companies and communities, which form another focal point of GoB policies.

One concern of the GoB is the amount of bureaucracy, which they are trying to reduce. A VPA process could contribute to

reducing and/or simplifying bureaucratic processes or - where these are unavoidable - explaining their necessity more

effectively.

In general, the mission encountered interest in knowing more on the topic, including experiences of VPA processes in other

countries and receiving materials (documents, folders, videos). In addition, interest was expressed in discussing the topic

between the different ministries involved.

Nonetheless, it should be noted that the different ministries of GoB have their own policies and priorities, and these do not

always point in the same direction. For example, the GoB promotes the conservation of natural resources and respect for

nature. At the same time the colonization of forest zones, accompanied by significant deforestation, occurs as a result of a

major lack of control by the responsible authorities.

Another negative factor is the employment instability of high level government staff. With the frequent changes of high-level

staff in ministries and institutions it is likely to be difficult to establish relationships, coordinate processes and consolidate

agreements.

5.3 The institutional situation

ABT (Autoridad de Bosques y Tierras; the Forest and Land Authority) is responsible for the control of forest management,

processing and transport of timber (products). Its main objective is to promote the sustainable and legal use of forests and

land. ABT has assumed the responsibilities of the former Superintendencia Forestal (Forest Authority) and the

Superintendencia Agraria (Land Authority). Although ABT has assumed this double role - which in itself is a positive change -it

counts at best with 10% more staff than the former Superintendencia Forestal alone. ABT currently has a team of 300 staff,

half of which is financed by the Dutch cooperation; it is of great concern that this support is planned to end in short term.

According to its estimations, ABT would need approximately 1,500 staff (80% technical) to be able to fulfil all its duties. ABT’s

main problem is financial – it does not receive any funding from the “Tesoro General de la Nación” (TGN; national treasury),

for its normal functioning and addressing the forestry and land activities. Other problems mentioned by ABT are the limited

level of training, physical threats to its field staff, and the opportunities for corruption of its own staff and support (e.g.

police) staff.


26

Due to lack of staff the operational capacity of ABT has been severely affected. The current forest law (Ley Forestal 1700)

requires the auditing of forest concessions every 5 years. A lack of interest from independent auditors (as required by law),

has meant that it has not been possible to carry out these audits. As a provisional measure, ABT has formed inspection teams

that have managed to inspect concessions in the departments of Pando and Beni. Inspections of concessions in other

departments and of all “Asociaciones Sociales de Lugar” (ASL; local community associations) have yet to be done.

ABT is responsible for issuing the “Certificado Forestal de Origen” (CFO; certificate of origin for the transport of timber and

timber products), of which several different types exist: CFO-A for logs, CFO-B for NTFP’s (Non-Timber Forest Products), CFO-

C for sawn timber, CFO-D for export products. Without these documents the timber (product) may not be transported and/or

sold. Before issuing a CFO, ABT has to implement a physical inspection. For example, before ABT can issue a CFO-A the

operator must have a concession permit or a deforestation permit (in case of conversion), must have carried out an inventory

of at least 10 %, must have prepared a Forest Management Plan (FMP) and have had it approved by ABT, must have

implemented a forest census (100% inventory) in order to prepare a “Plan Operativo Anual Forestal” (POAF; annual forest

operation plan), must have undertaken the necessary silvicultural measures, must have been subjected to a physical

inspection by ABT and have paid all relevant patents and fees. Only after all this, it is possible to obtain a CFO. Due to lack of

staff at ABT, the producer has to wait until the ABT staff have time; due to lack of transport/travel allowances for ABT

officials, companies are frequently obliged to transport the inspectors themselves, which often results in trips of hundreds of

kilometres – and in one extreme case more than one thousand kilometres. Additionally, the validity of the different permits,

which is often quite limited, must be watched carefully, in order to avoid loosing them as a result of delays caused by ABT

procedures themselves.

With regard to processing centres, ABT operates a primary material supply and processing control programme as well as

maintaining fixed highway control posts (and some mobile units) to control movement of log and timber (products). If the

data mentioned in the papers do not coincide with those of the transported load, of the transporting vehicle or of the census,

ABT may confiscate the load and the means of transport. Finally, ABT inspects shipments before their export and sometimes

checks the registration of companies.

ABT is aware of the inconveniences that their inspections are causing and is considering changing the 100 % physical

inspection scheme for all companies into a random inspection system for operators that do not show irregularities.

Although Bolivia has quite an advanced and internationally acknowledged Forest Law, a new forest law is currently being

drafted. There is no guarantee that the new Forest Law will become valid in 2012 or in 2013. It is possible that the new law

will have significant institutional consequences, including for ABT.

Also the development of a national forest certification system is foreseen, which may perhaps be implemented by IBNORCA.

This institution establishes all technical norms in Bolivia; besides it offers certification training and plays the role of

certification body (CB) for specific norms. With respect to forest certification, IBNORCA has had contacts with WWF and FSC.

So far they have not had any experience with legality verification.

With reference to the control of the forest sector there are several other governmental organizations that play an important

role: the “Servicio Nacional de Impuestos” (known as “Renta”); national tax department) checks whether taxes have been

paid correctly, the “Dirección Departamental de Trabajo” (officially representing the Ministry of Labour) controls the labour,

social and safety conditions and the “Servicio Nacional de Sanidad Agropecuaria Inocuidad Animal” (SENASAG; national

phytosanitary and veterinary service) controls sanitary conditions and fumigates containers before export.

Other institutions related to the forest sector are the commercial and export chambers like “Cámara Nacional de

Exportadores de Bolivia” (CANEB; National Chamber of Bolivian Exporters), “Cámara de Exportadores de Santa Cruz” (CADEX;

Chamber of Exporters of Santa Cruz), “Cámara Forestal de Bolivia” (CFB; Forestry Chamber of Bolivia) and other related

institutions like the “Instituto Boliviano de Comercio Exterior” (IBCE; Bolivian Institute for External Trade). These

organizations represent different parts of productive chain of the sector, maintain data on their associates and/or the sector

in general and may play important roles in the diffusion of strategic information and awareness creation amongst their

associates and/or the sector in general.


27

There are several NGO’s in Bolivia that are related to the forest sector, be it through productive projects and/or community

development (e.g. CADEFOR, SNV, FCBC, the PUMA Foundation) or through conservation and/or sustainable use activities

(e.g. WWF, FAN, TNC, FCBC). Although, in general, these organizations are focussing on their specific topics, they form an

important group with relevant experience and knowledge, independent judgement capacity and a relevant network of

(national and international) contacts.

SmartWood / Rainforest Alliance (SW/RA) is an NGO that functions as a forestry certification body. SW/RA has an office in

Santa Cruz and has certified most of the FSC certified companies (forest management and/or Chain of Custody - CoC).

Although SW/RA has its own VLC verification system - well known in many parts of the world and frequently applied as part

of a phased approach towards FSC certification - it has not yet been applied in Bolivia. Another CB, SGS, does not currently

have an office in Bolivia, but does have experience with FSC in Bolivia and has its own VLC verification system23

.

Relevant universities and research institutions are the “Instituto Boliviano de Investigación Forestal (IBIF; Bolivian Forest

Research Institute), associated to the UAGRM and the “Universidad de la Cordillera”24

. The “Instituto Interamericano de

Cooperación Agrícola” (IICA; Inter-American Institute for Agricultural Cooperation) has forestry support programs in Bolivia.

Although the FAO (the Food and Agriculture Organization of the UN) does not currently have any specifically forestry projects

in Bolivia, they have a fund to support forestry activities.

Furthermore, there is a network of donors that are active on environmental issues. The participants of this network

interchange information and coordinate activities and support. Amongst the participants the following can be mentioned:

Embassies of the UK, Denmark, Germany, The Netherlands, Sweden, South Korea, the EU and US-AID.

Finally, lead by CADEX, there is the TTF, a national forestry forum, whose active participants include forest- and timber

(-product) companies, stakeholders from the public and private sectors, NGO’s and developing organizations, universities and

research institutions, BSO’s (Business Support Organizations) and regional and sector chambers, among others. They aim to

address and solve national and international problems to the Bolivian forest sector. TTF also endeavours to establish

international contacts with donors, importers and sector support organizations. It supports projects related to environment,

the EU, market development and capacity building, among others. It is an initiative that is supported by CBI. The TTF was

established only 2 years ago and is still “gaining strength”. TTF aspires to represent the interests of all stakeholders in the

Bolivian forestry sector.

5.4 Illegal logging and its control in Bolivia

Between 2001 and 2011 estimations of the volume of timber resulting from illegal logging have varied between 50 % and

80 % of the volume harvested legally (Stortelder, 2010). For 2011 it is estimated that approximately 50 % of the harvest was

“informal” (illegal), involving a volume of approximately 1 million m3 (Heredia García, 2012). Illegal timber is mainly

absorbed by the national market. It is estimated that the GoB loses approximately 1 - 2 million US $ per year in taxes and

fees. Illegal timber (as a result of direct harvesting of trees in the forest or due to deforestation in order to change of land

use, e.g. for soya or coca cultivation or cattle farming) originates from forest concessions, private, communal, national or

municipality areas as well as through falsification of data and documents: inventories, transport and processing and illegal

marketing.

23

There are several other certification bodies with experience in FSC certification in Bolivia like IMÖ Control (with office in Cochabamba), Control Union

(with office in Colombia) and IMAFLORA (with office in Brazil); these CB’s however DO NOT have a VLC verification system. Certification body BVC (with

office in France) also has its own legality verification system: OLB (Origíne et Légalité des Bois).

24 The Forestry Department of the Universidad de la Cordillera receives support from the Dutch Embassy and is active on Climate Change and REDD

(Reducing Emissions from Deforestation and Climate Change), among others.


28

Figure 5.1: Confiscated trucks, materials and timber, in custody in the yard of ABT in Santa Cruz (March, 2012).

In recent months control by ABT has become more efficient and intensive; this has resulted in an increase in the number of

timber-laden trucks, tractors and other equipment and materials that have been confiscated (Figure 5.1). The more than

1.500 trucks with sawn timber and/or logs that are sequestered in the different offices of ABT have an estimated value of 25

million US $ (Heredia García, 2012). The embargoes have caused demonstrations and occupations, especially by (family

members of) people that are working in the informal market (Figure 5.2).

Figure 5.2: Demonstration by people demanding the restitution of their “working tools”, in front of the ABT HQ, Santa Cruz (March, 2012).

According to ABT the introduction of the digital CFO (a new procedure to reduce illegality and exert major control within a

short time) has been a very important factor their fight against illegal logging. This process does not only include more secure

documents (e.g. with “bar code”), but also physical control of logs at forest landings, where comparisons are made with the

census data. Furthermore, it has helped to reduce corruption at the road blocks, by impeding the recycling (“bicicleteo”) of

CFO’s. ABT estimates that they have succeeded in reducing illegal logging by 80 %. Actually ABT receives support from the

military at their checkpoints in order to improve control. .

For very many years log exports have been prohibited. More recently, though loggers have been getting around the ban by

producing “flitches” (squared logs) for export, especially to China. Now the export of flitches has been prohibited as well.

Table 5.1 summarizes the experiences of the companies interviewed with respect to the frequency of controls by

government agencies.


29

Table 5.1: Control of the forestry chain by authorities, as experienced in practice by the companies interviewed (N=9).

5.5 The legal situation of the companies interviewed

The companies interviewed are all legally registered. Table 5.2 presents some general impressions on aspects that are related

to the legality of these companies. The majority of the companies consider that they are complying with the law and that

they do not have to change much in order to be able to comply with the requirements of the EU with respect to legality.

There are however some aspects that require attention in order to achieve a VLC (Verification of Legal Compliance) level. It

has to be stressed that, as expected, FSC certified companies are the most advanced. As mentioned before, it is not the

intention to present a statistical analysis in this report, but just an example of relevant aspects, based on the results of the

interviews with a non-random sample of companies interviewed. These represent only 22 % of the value of the timber

(products) exported by Bolivia to the EU.


30

Table 5.2: Some legal aspects of the companies interviewed (N=9). The colour in the column “risk” expresses the level of risk for not

complying with the legal context (with increasing risk from dark green, via lighter greens and orange to red).

According to the majority of the people interviewed both in Bolivia and in the EU, there is a considerable series of legal

requirements for forest companies in Bolivia. Table 5.3 presents those aspects mentioned in the interviews. During a VPA

process those aspects would be identified whose legal compliance would be considered obligatory for the control of the LAS;

FLEGT certificates would only be issued in these cases that those aspects are fully complied with.


31

Table 5.3: Inventory of legal requirements, mentioned by the stakeholders interviewed.

5.6 Forecast effects of the EUTR

More than half of the companies interviewed in Bolivia did not know what effect the introduction of the EUTR

would have in the long term. 10 % thought that it would help to clean-up the sector. With regard to the short

term there is more clarity: one third responded that exporting companies will have to comply with the norms and

a quarter foresee that, due to a likely scarcity of timber with a FLEGT licence it is possible that there will be a

shortage of timber on the EU market, as a result of which prices may rise (at least temporarily).

Regarding the effects on individual companies one quarter of the companies interviewed considered that there

will not be many changes, as they are already complying with all the norms and/or are FSC certified. Almost half

considered that – although they are already complying with the norms – it will be convenient to demonstrate that

with a VLC verification (or, perhaps, in the future and depending on the market and additional costs25 involved, by

25

The costs of certification can generally be divided into “direct costs” (costs of audits - inception and annual monitoring - by the certification body and the

annual contribution to FSC) and the “indirect costs” (costs necessary to achieve the certifiable level, for example to make relevant adjustments to the

operational procedures and administration of the company, training of staff, adjustments in forest management practices, investments in materials and

equipment (e.g. GPS, software, personal security equipments, etc), socio-cultural and/or ecological studies). Generally the indirect costs are higher than the


32

FSC certification). Another quarter indicated that they have no option but to comply, but that they do not know

whether this will have significant effects on the company. One company was considering abandoning the EU

market for another.

5.7 Strengths of Bolivia

The majority of currently exporting companies, FSC certified or not, believes that26

they operate legally in the entire

chain of custody and provide much evidence suggesting that this is correct. It will certainly not cost them much to

satisfy the legality requirements of the EUTR. With an acknowledged certificate of VLC or FSC27

they will be able to

demonstrate to their clients in the EU that they comply with the “legality” standards required by the EUTR, which is

based precisely on the VLC level. These certificates will probably be accepted by the DDS of the operators and the

MO’s in the EU.

Bolivia already has an acknowledged certification body installed in the country (Smartwood/Rainforest Alliance),

which has a VLC verification system and a lot of experience with FSC certification. Other CB’s also have an

acknowledged VLC system and some experience in Bolivia (SGS, BVC) or just have experience with FSC certification

in the country (IMO, CUC, IMAFLORA).

Bolivia has abundant forest resources available for legal logging (Bolivia occupies sixth place with respect to forest

cover worldwide; Annex 9) and has approximately fifteen years of experience with FSC certification in its legal and

sustainable logging and processing.

Bolivia has an overcapacity of processing units which could enable it to increase its production at any moment.

The Bolivian exporting companies already act within the established legal framework and therefore very legally

compared with the majority of the traditional countries (former British and French colonies) that supply the EU

market with tropical timber thus making it easier for the Bolivian companies to compete with traditional suppliers.

direct costs. In the case of VLC verification the direct costs are limited to the audit costs, while the indirect costs are significantly lower than those for FSC

certification. Although it is not possible to provide precise cost data (as these depend on the specific situation of each company and have to be negotiated

with the certification bodies) there is a general indication that refers to the levels of requirements of VLC and FSC. According to SW/RA the level of VLC is

approximately 65 % of the requirements for FSC certification.

26 It is possible that due to lack of adequate and/or actualized information, lack of understanding or ignorance there is “room for improvement”. It is

important for all stakeholders that the rules are written in black and white, understandable and accessible; in other words: there is a need for transparency.

27 Actually FSC is integrating legality elements in its CoC standard, so that it can be accepted by the Due Diligence Systems of the Operators and/or

Monitoring Organizations in the EU.


33

6. The relevance of a VPA for Bolivia

6.1 Why could a VPA be important for Bolivia?

Basic question: Should the GoB start the process of negotiating a VPA?

We believe YES

Why?

• Because the effective implementation of a VPA would mean the installation of a long-term institution capable of

assuring the legal exploitation of the forest throughout the country.

• Because the effective implementation of a VPA will make the rules of play much clearer, will considerably improve

the structure of the sector, and will put an end to unfair and strong competition by illegal actors.

• Because a FLEGT certification at country level will greatly facilitate the participation in exporting of medium and

small companies and communities, that are involved in forest management and develop community enterprises (or

develop long-term community – company association mechanisms).

• Because European assistance for any country undergoing the process of a VPA, especially for institutional

strengthening, will greatly help the GoB achieve its objective of significantly reducing, if not totally eliminating,

illegal timber and, furthermore, it coincides with the GoB policy of “integral and sustainable management of the

forests” and of “putting an end to illegal logging”. These elements are integrated in the “National Development Plan

to Live Good”.

• Because the effective implementation of a VPA will affect not only exports but also the national market, and will

thus help the GoB recover taxes that it deserves.

• Because a VPA promotes transparency28

in the sector: more transparency + less bureaucracy = less illegality.

• Because a VPA will allow for the stimulation of investment in the sector, both nationally and internationally.

6.2 Thoughts of stakeholders on the possibility of Bolivia signing a VPA

While speaking to a range of actors in the Bolivian forestry sector, the mission realised that it was very necessary first to

explain FLEGT, VPA and EUTR before being able to discuss with them the desirability of a VPA and the different elements to

be taken into account in a VPA process

The majority of actors interviewed agreed that, in the long term, it will be important for Bolivia to sign a VPA. Table 6.1

presents some of the reasons why a VPA could be of interest to Bolivia, according to the different stakeholders.

28

Reference is made to the transparency of the sector in general and the fact that the timber (-product) chain can be followed by the authorities and/or

independent auditors. It is not suggested here that the entire chain (and all relevant commercial contacts) will be made public.


34

Table 6.1: Reasons why a VPA would be of interest for Bolivia, according to different stakeholders.

The different representatives, authorities and companies interviewed expressed the following:

The representatives of the GoB were grateful for the explanations given and wished to obtain further information

and materials on the subject. They all also are motivated to discuss the topic in more detail with the other ministries

involved.

The companies and the sector organisations generally think that a VPA could be important, not only for exporting to

the EU, but, above all, to “clean up” the sector nationally. Given that the vast majority of exporting companies are

already doing their best to fulfil the established legal requirements (and a significant part of them has even received

FSC certification), they don’t expect it will have a great effect on them.29

However, they do realise the possible

competitive advantages as well as the possible positive effect on prices when the illegal offer is less; also there exists

the possibility of their increasing production, thus reducing the weight of fixed costs per cubic metre and, at the

same time, being able to fulfil larger orders for their clients. Given that a major part of the forest resource is

currently in the hands of communities, the sector is also interested in obtaining formal access to the resource

managed and offered (standing or in rodeo) by them.

The NGO’s emphasise that a VPA represents an opportunity for building a bridge between the communities and the

private sector which could and should be favourable for both. At present the major part of the forest is in the hands

of communities (ASLs, TCOs). In many cases it is there that the deforestation and illegal logging (with chainsaw) is

greatest. There are more than 600 Forest Management Plans (FMP) for areas less than 200 hectares that are not

controlled (the Forest Law 1700 focuses mostly on large concessions rather than areas less than 200 hectares). It will

be important to achieve the integration of the communities, small producers and those with limited resources in the

legal process. There are examples of successful community involvement in forest management, with positive effects

on employment, standard of living and social cohesion. This also suits the GoB because it will help to create jobs in

rural areas.

29

This has been confirmed by the auditors of SW/RA; according to them, there is a major difference between the formal and the informal sector. “The illegal

ones have a different structure, different concept and a different way of functioning”.


35

For their part, the aid donors emphasised that it is important that the country diversify its sources of revenue and

that there will be a considerable recovery of funds for GoB from taxes and patents once the sector is working legally.

In general the actors believe that it is possible for Bolivia to implement a VPA (approximately from 2 to 5 years hence), but

recommend bearing in mind the following points:

“It is necessary to speak the same language as the GoB and emphasise how a VPA will favour its various policies”,

“It is necessary to stimulate the GoB “to fall in love” with the idea of VPA/FLEGT”,

“The GoB itself must lead the process (not the sector itself nor the NGO’s)”,

“The EU must seek the collaboration of the GoB in making a political decision on the subject”,

“Some sectors of the population that are responsible for deforestation act thus due to poverty; this

aspect must be taken into account in the strategy”,

“The opportunities offered by a VPA to communities (native and peasant) and small companies must be

emphasised”,

“It must not be forgotten that 2014 is an election year; thus 2013 could be affected”.

Some actors do not believe that a VPA is feasible simply because they doubt that the GoB will be interested in one

for political reasons or because it could think that it would principally favour large industry or because it would

never accept an independent monitoring of the system. Others doubt that the system could avoid becoming one

more bureaucratic nightmare.

The actors also agree that it will be very important that all the actors in the sector are involved in the process;

among these they identify: The Foreign Ministry, the Vice-Presidency, The Ministry of Finance and Economy, The

Ministry of the Environment, The Vice-Ministry of Environment, Biodiversity, Climate Change and Forest

Development and Management (and its Directorate of Forest Development and Management), The Vice-Ministry

of Small and Micro Business, ABT, the private sector (companies, communities, ASL, TCO, manufacturers), sector

organisations (CFB, CANEB, CADEX30, CAMEX), certifiers (IBNORCA, SW/RA, SGS), research and sector support

institutions (IBIF, CADEFOR), universities, professionals, the indigenous sector (the Asociación Indigena Forestal

Nacional), embassies and other donors (EU, FAO), the environmental sub-group of the donors, civil society (FAN,

WWF, FCBC, TNC, SNV, ICCO, HIVOS, TAA, etc.) and anyone else who may wish to become involved in the process.

Of the companies interviewed, two thirds indicated that a VPA will be important for the sector; 10% didn’t know

whilst a quarter agreed that it was important but didn’t believe it was feasible. More than half of the companies

interviewed believed that a VPA would be important for their own company, in many cases because it would

provide them with new opportunities and a competitive advantage.

6.3 Steps to follow to achieve a VPA in Bolivia

Based on the previous paragraphs, we propose, firstly, focusing on an information and awakening campaign amongst the

major actors in the sector and, especially, the authorities. On the one hand it is hoped that this mission and that of EFI (both

30

This includes the TTF as platform organization, coordinated by CADEX.


36

in March 2012) will have had a certain positive effect. However we suppose that this will not have been enough, and

therefore suggest that the EU itself makes available in the short term to the different authorities in Bolivia the relevant and

official information (including videos, reports, posters, experiences from other countries) so that these actors will have

sufficient information to be able to begin fruitful internal discussions on the matter.

At the same time we suggest that the TTF, in coordination with the environmental group of donors, organise some

information events and initiate a flow of appropriate information to the other groups of actors already identified in this

report. Finally we support the EU proposal to send a political mission within a few months with the specific objective of

organising a workshop for the authorities in order to answer all their questions and possible doubts about the VPA process.

These activities should be considered part of the pre-negotiation phase (see Figure 2.2, paragraph 2.12).

In the event of the GoB deciding that it is genuinely interested in starting a VPA process, we propose, in line with experiences

of VPA processes in other countries and bearing in mind the particular Bolivian context, the steps presented in Figure 6.1 and

described below in more detail. Annex 10 presents a checklist of the steps and activities to be developed.

Figure 6.1: Steps of the preparation process of a VPA.


37

A. Development of a definition of legality

1. Identify groups of stakeholders involved and establish a consulting process with them: this requires a systematic and

thorough identification of the stakeholders in order to involve them in the VPA process in such a way as to give both

national and international credibility to the VPA. The stakeholders comprise at least all those involved in or affected

by forest production. It is important to involve all the different groups of stakeholders because they may have

different experiences and perspectives and, as a result, different priorities, problems of implementation or lack of

clarity in the legal context. The consultations with the stakeholders allow the discussion of different priorities in

order to avoid possible conflicts. The interaction with the stakeholders allows them to familiarise themselves with

current legislation and with the identification of their most relevant needs, thus solidifying local support for the

definition. The objective is to agree clear and unambiguous requisites. The participation of all the stakeholders also

helps to educate and achieve a common voice. The consultation processes with the stakeholders must allow these

to express their opinions, worries and suggestions in such a way that dialogue prospers between the different

groups of stakeholders in order to achieve practical solutions that satisfy the requisites for the definition of legality.

Based on experiences of consulting processes to date certain lessons have been learned31

(EFI, 2010). In the case of

Bolivia it is recommended that the valuable experiences of VPA processes in other countries32

be taken into account.

It is important to successfully identify all the groups of stakeholders, inform them and involve them. Whilst the

process may be led by the GoB, we suggest that the GoB be supported by an independent group that makes

available all necessary information so that the process attains the necessary quality and depth. We recommend that

this facilitating group be the environmental subgroup of the donors. Although the legal context is broad and existing

laws are fairly advanced, such discussion will help to identify rules which are perhaps redundant in certain

circumstances (as, for example, the indiscriminate fumigation by SENASAG of kiln dried timber packaged in plastic

prior to export.

2. Agree and establish a process for developing the definition of legality: the development of the definition of legality is

achieved by processes of consultation and explanation between groups of stakeholders, followed by negotiation

between groups of stakeholders and between the EU and the partner country. It is important that these internal and

external processes be clearly linked in such a way as to ensure that the internal processes provide information

useful for the external negotiations. For this it is necessary a) that there exists an openness and total transparency

in both the internal and external processes, b) that rules of communication and information are imposed for both

the internal and the external processes and c) that consistency is achieved in the representation of the groups

throughout the process. Amongst the lessons learned it is important to mention the need to agree who will be

responsible for developing the draft, how to revise the drafts and how to take decisions on requisites and

verification. By establishing the rules of play before dealing with the content promotes clearer and more realistic

expectations regarding the participation of the stakeholders. Another lesson learned is the need to give the group

representatives sufficient time to interact with their bases. For example, in remote areas more time may be required

due to the practical difficulties of travelling and the specific calendar of the stakeholders; also it may be necessary to

translate, adapt and interpret documents, either orally or in writing, so that the stakeholders can better understand

them. The support of NGO’s or community organisations may be necessary in order to attain the desired quality of

consultation process. In the Bolivian context the NGO’s have expressed an interest in supporting local processes,

above all at those locations where the GoB lacks presence and/or the capacity to reach all parts.

31

Consultation processes: 1) take time; 2) require flexibility; 3) may need additional support to guarantee a fair process; 4) require appropriate attention

and capacity in order to manage them professionally; 5) need to agree structures, rules and expectations, including roles and responsibilities; 6) require the

use of different communication techniques and clarity regarding which to use and when; 7) require a selection of representatives for the same group of

stakeholders (rather than designation by the authorities); 8) requires equal transparency with regard to the interests of all the groups of stakeholders; 9)

have shown that what seems to be a single group of stakeholders may represent a series of different interests; in such cases it is best to separate the

different subgroups so that all have their own voice.

32 Reference is made to the publications of the EU on signed VPA’s, which are available in English and Spanish (see Annex 4, list of documents) and to the

FLEGT website of EFI (www.euflegt.efi.int).

http://www.euflegt.efi.int/


38

3. Define what types of ownership and which timber sources will be covered by the definition of legality: the sources

and ownership of the wood must be made clear in the definition of legality. This refers equally to the requisites for

sources within the partner country as for timber imported to the partner country and subsequently exported to the

EU. The partner country may decide which types of product should be included in the VPA, if there should be few or

all. Some countries have applied a phased strategy. One lesson learned is that this confuses the situation and gives

the informal market “wriggle room”; it is better to focus on a complete list of VPA products in order to bring about

the necessary legal changes throughout the sector. In the case of Bolivia it is suggested that the focus be on all

export timber products regardless of their destination (EU or elsewhere). In order to have a greater impact on

legality and an effective LAS it is suggested that the requirements be applied also to products for the national

market as well as for own consumption.

4. Compare and contrast a “long list” of relevant legislation that should be taken into account for the needs of the

definition of legality: the definition of legality n a VPA is based upon a collection of national legislation that includes

laws, rules and other regulatory texts such as codes and international treaties ratified by the partner country. VPA

processes normally include requirements based on legislation that go beyond the strict forest legislation. The

definitions of legality must take into account legislation relating to social, economic and environmental obligations.

These include legal registration, payment of taxes, community obligations, health and security of employees, labour

regulations, environmental regulations, and customs obligations, amongst others. Many of these requirements are

not specifically included in forestry legislation. It is important to use the complete list as the basis for the discussion.

5. Consider and decide via consultations with the many parties involved the content of the definition of legality (e.g.

requisites, evidence necessary to prove compliance): the definition of legality will vary between countries depending

on the legal context, the forest types and the institutional context, amongst other factors. However, certain basic

elements exist that must inevitably be taken into account in the definition: a) principles (they provide a convenient

means of grouping the intentions of different laws), b) requirements (type of indicators), c) verifiers of compliance

(document, report or activity that demonstrates compliance), d) legal references (the legal text that justifies the

requirement) and e) sources of wood and ownership. The most effective means of transmitting the definition of

legality is by presenting the information in a table (Annex 11 presents an example). The principles help to classify

the requirements of thematic areas. The requirements must be clear and indicate without ambiguity if they have

been complied with or not. One should prove the compliance with all the requirements included in the definition of

legality. The verification processes contained in the LAS need to be checked periodically; hence it is necessary to

make a strategic selection of the requirements. Identifying the principal problems and the main requirements to be

discussed is an essential part of the dialogue for defining legality. The choice of a few strategic requisites instead of

overburdening the definition with all possible requisites will ensure that the system is easier to implement and

follow. Government priorities may guide this process. The verifiers are objective evidence that demonstrate

compliance. In a LAS all the requirements must be proven. One lesson learned is that many original drafts of verifiers

suffer problems such as a too general description, the lack of relevance to the requirement or being open to

different interpretations. The references are based on the currently valid legal context. In the case of Bolivia, we

suggest developing a table as described; when it is necessary to include elements of the new forest law that is

foreseen, they may be included under the requirement and verifier headings whilst in the reference heading one

may indicate that it is still subject to a process of legislative reform.

6. Identify areas that need work or additional analysis (e.g. contradictory legislation, lacunas, legal reforms): many

countries find difficulties by insisting on compliance when there are contradictions or confusion. The process of

definition of legality easily identifies eventual inconsistencies or lacunas that require additional study and/or

analysis. If there is an interest in providing a solution to some inconsistency, it may be described in an annex

“additional measures”. The purpose of the definition of legality is not to create a parallel legal framework but to

provide an opportunity for identifying, treating, and in some cases improving areas of legislation and regulation that

are difficult to implement, impractical or confusing. In some processes VPA was the first time such a broad process

of reflection had been undertaken.


39

7. Undertake a field trial of the definition of legality once a solid draft is available: once the definition of legality has

been developed and has achieved the support of the stakeholders involved and has been discussed with the EU, a

field trial of the same should be undertaken. Amongst other advantages, this will facilitate the detection of

incoherencies, the inclusion of impractical requirements, the verification of the applicability of the definition in

practice, the determination of which departments participate and the facilitation of the development of a LAS. The

trial is normally undertaken by a team of professionals with experience relevant to legal verification, assisted by

government professionals with knowledge of the legal context of the country; sometimes representatives of NGO’s

also participate in order to attain a balanced combination. The trial consists of visiting a sample of sites

representative of the different types of authorisation or circumstances identified in the definition. The team will

check that each requirement and verifier is relevant and could be applied in practice, at the same time making

comments and recommendations for their improvement. The team will interact with forest stakeholders at each site

visited in order to gain a better understanding of possible worries or problems with the definition.

8. Review and address the comments of the field trial and conclude the definition of legality: the trial team will submit a

report with their conclusions and recommendations, which should be analysed and evaluated by the partner

country with a view to later, if necessary, modifying the definition of legality.

9. Present the definition of legality as an annex to the VPA: the agreed definition of legality remains written in the

annex of the VPA. It is divided into two parts: a) general information (a brief summary of the forest sector and the

legal framework, presenting a list of legislation and rules used and a description of the process of development of

the definition) and b) the tables of the definition of legality (see point 5).

10. Link the definition of legality to the development of the LAS: the definition of legality represents only 1 of the 5

elements of the LAS. Given that it is the foundation for the other elements, normally it is the first element to be

developed and negotiated within the VPA process. This does not mean that the other elements may not be started

until the definition of legality has been concluded. In order to develop the LAS, all its elements (see paragraph 2.1

and Figure 2.1) must have been defined and agreed.

B. Present and discuss the draft definition of legality in the negotiation sessions with the EU

The formal technical negotiations between the partner country and the EU will include discussions on the definition of

legality. These discussions may take place at any stage of the process of elaborating the draft and help to ensure that the

definition is clear and practical, including, without undue emphasis, social, environmental and economic obligations and

covering all the necessary areas of interest that have been accepted by all the stakeholders involved. There generally exists a

need to discuss various drafts before reaching a consensus. If necessary, the EU offers technical support to clarify matters or

undertake any additional analysis.

C. Signing of the agreement and ratification by both parties (GoB and EU)

Once the content of the VPA has been agreed, an official signing ceremony is celebrated amidst publicity and articles in the

national and international press. After this official act a certain amount of time is required for both parties to ratify the

agreement in their respective parliaments. After the ratification it is important to launch an information campaign on the

final content of the VPA, directed not only to the forest sector but also to the general public.

D. Preparation of the implementation (development of the LAS)

The development of the LAS includes all the activities necessary to make adequately operative the different elements of the

LAS as defined before the signing of the VPA. This includes the creation of the necessary authorities and the provision of

adequate information to the public. In the case of Bolivia it would include amongst other things the creation of sufficient


40

capacity in the ABT, the training of the ABT team, the designation of authority to a National FLEGT Licensing Unit (NFLU), the

training of NFLU staff, agreements regarding the modus operandi of the Joint Implementation Committee (JIC), the NFLU, the

National Legality Verification System (NLVS) and the Independent Monitoring Organisation (IMO), the appointment of

pertinent staff, the assurance of necessary budgets, and notification of the stakeholders involved and the public in general.

Finally the correct functioning of the system in practice must be checked before the NFLU can authorise the first FLEGT

licence.

E. Implementation of the VPA in practice

Once the real functioning of the whole system has been duly verified, the JIC can define the date on which the VPA takes

effect in practice. From that moment all the elements must function as agreed. Furthermore the monitoring of the

functioning of the system begins to operate, not only the regular, planned monitoring (e.g. every six months) but also the

emergency monitoring (based on warning notices), both implemented by the IMO. It should be noted that when the JIC

observes, on the basis of the IMO reports, that the system needs to make certain adjustments in order to operate well, it has

the power to insist. If the requirements of the JIC are not fully met, the JIC has the power to annul the VPA. In the case of

Bolivia, and notwithstanding the supposition that the VPA would include all timber products produced in the country, it

would be possible to obtain FLEGT licences for timber products produced by peasant communities, indigenous groups, small,

medium and large companies. It should be noted, however, that in order to successfully place a product on the EU market,

not only must it comply with legality standards but also meet certain standards of quality, dimensions, volume and delivery

date.

6.4 Financing

There will be no special EU FLEGT Fund to support a FLEGT programme in Bolivia. It is primarily the responsability of the GoB

(but the EU will be available at all times to support the necessary processes).

With reference to the alternatives for (co-)financing it should be mentioned that:

1. The general development cooperation programme between the EU and Latin American countries for the period

2014 - 2020 will focus on only two countries: Paraguay and Bolivia. Compared with the budget for the present

period, which is shared by many countries, the 2014 – 2020 budget will be unchanged. This means that the

availability of funds will increase significantly. If the GoB is disposed to spending money on a FLEGT programme, it

could decide to use a part of the bilateral cooperation funds for this purpose (Personal Communication J. Bazill,

2012).

2. The FAO has established a “Forest Facility” Fund with the Vice-Ministry of Environment for 300,000 US $/year. So far

this has scarcely been used. The fund could be used to organise activities in support of the FLEGT process.

3. There exists a platform of environmental donors in Bolivia. There are indications that several of the donor

participants would be interested in supporting FLEGT-related activities on a bilateral basis.


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7. Conclusions and Recommendations

7.1 Conclusions

1. Taking into consideration the advances in the VPA processes in the world so far, with 6 VPA’s signed and ratified and

another 4 in negotiation, that none of these has achieved effective implementation while the negotiation and

associated development processes have taken already between 3 and 6 years, and that these VPA processes require

certain quality in order to effectively achieve the legality of the forestry chain, it is considered impossible and,

furthermore, undesirable, to think of achieving a the VPA for Bolivia within a year. Nonetheless, it is suggested that

the the negotiation of a VPA be considered as useful and an important strategy for medium- and/or long-term.

2. The EUTR is a law of the EU that requires of the operators in the EU that timber (products) put by them on the EU

market be legal (in force from 03/03/2013). As a consequence of the EUTR importers of Bolivian timber (products)

probably will require of their providers the presentation of the necessary proof to be able to guarantee the legality

to the European authorities.

3. In the framework of the EUTR the EU will not define a “green lane” for forest certification systems (FSC, PEFC) or VLC

systems (SW/RA-VLC, SGS-VLC, BVC-OLB). Instead the EU will establish an operational scheme that will function in

every member state, by means of which - on the basis of Due Diligence Systems – it will be possible to accept

certificates of certification/verification systems indirectly. Therefore, having a FSC, PEFC or VLC certificate will likely

facilitate access to the EU market.

4. There is a lot of misinformation, confusion and misinterpretation concerning FLEGT, VPA and EUTR at the level of all

stakeholder groups involved in the Bolivian forestry sector, and especially the private sector. This mission found

that, at best, only 10 % of the interviewed stakeholders have some basic knowledge of these topics. All recognize

that there is a great need to obtain additional information on these issues.

5. The private sector in the EU is preparing itself for the introduction of the EUTR. It is estimated that approximately

50% of the companies that import Bolivian timber (products) are sufficiently informed to be able to prepare

themselves for the introduction of the EUTR. However, many of them are waiting or delaying their effective

preparation until the regulations of the EU become clearer with respect to which verification and/or certification

systems will be accepted by them. In reality however the EU will not give any judgement on this in a direct way, but

instead will leave this decision to the Due Diligence Systems of the Operators and/or Monitoring Organizations and

the related control by the Designated Authorities in the EU Member States.

6. The formal forestry sector, including Brazil nut production (as NTFP), contributes approximately 3 % to the GNP and

8.8 % to the total export value. The contribution of the sub-sector of timber (products) is estimated at 1.1 % of the

GNP (US $ 565.5 million) and 3.2 % of the export value (US$ 30.6 million). Supposedly the real contribution of the

timber sector to GNP is much bigger because of the large informal sector that supplies the national market.

7. There are approximately 1,300 forest companies registered with the ABT (2011), which include roughly 6,000

production units, of which 70 % are small or medium-sized companies. These companies employ approximately

90,000 people directly and 160,000 people indirectly. To estimate the employment generated by the formal timber

sub-sector (multiplier effect) the multiplication factor 2.54 is applied, which represents 635,000 jobs.


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8. The EU market is important to Bolivia. In 2011 the export of timber (products) from Bolivia to the EU market totalled

29.5 US $ million, equivalent to 34.7 % of total timber (products) exports. The EU and USA are the most important

markets for Bolivia. Between 2001 and 2011 exports to the EU increased at least 347 %, while those to USA shrank

by a factor of 0.6. The Chinese market has increased even more than the EU market; while its value is not very big (it

hardly reaches 25 % of the value exported to the EU) the exported volume almost tripled the volume exported to

the EU. A noteworthy characteristic of the EU and US markets is that they generate high added value, contrary to

the markets of China and Latin America (Brazil, Argentina, Mexico). The import of timber (products) from Bolivia to

the EU in 2011 represents less than 1 % of the total import of tropical timber (products); therefore the Bolivian

market is not very important for the EU.

9. The companies that import timber (products) from Bolivia to the EU consider that these products have already

achieved their place in the EU market, especially for outdoor use. Besides they consider that the introduction of the

EUTR does not necessarily need to be a major impediment for continued imports. Instead they consider that other

factors are more important, such as bureaucratic limitations in Bolivia, the limited production capacity of many

companies, delays in delivery and the general level of compliance with contract terms.

10. There are 3 options to comply with the requirements of the EUTR:

1) A FLEGT license (in the long term the easiest way, as these will be accepted directly by the authorities of the EU)

or a CITES certificate (which is equally acceptable);

2) A forest management certificate (FSC, PEFC) or a Verified Legal Compliance certificate (SW/RA-VLC, SGS-VLC,

OLB), as there is high probability that these will be accepted by the Due Diligence Systems of the Operators or

Monitoring Organizations;

3) All other relevant proof in order to be able to demonstrate full legal compliance (copies of proof to accompany

each exported load; more complicated and insecure), for which there is a chance of it being accepted by the

DDS of the OP or the MO, provided that the evidence is complete and convincing.

While the first option will probably delay several years, in practice exports will continue, making use of the

second option, or, perhaps, in a few cases, the third. The second option is considered the most practical,

especially the case of a VLC certificate that is the most easily attainable level in the short term for the majority

of companies.

11. According to the representatives of the GoB interviewed by the mission, an initiative like FLEGT/VPA fits well within

the policies of “integrated and sustainable forest management” and of “ending illegality in the forest chain” and

therefore might be of interest to the GoB. A VPA process might be of special interest for small and medium

companies and communities, which form another focal point of the GoB policies. There is interest to get to know

more on the topic and to discuss it with colleagues of other ministries related to the sector. The influence of

different political forces at GoB level and the frequent changes of staff and administrators at the relevant

governmental institutions is likely to make the VPA negotiation process more difficult.

12. The governmental institutional situation is rather complicated, given that ABT, the organization responsible for

sustainable and legal forest management, approval of the Forest Management Plans, the control of the forestry

chain and taxation, amongst other responsibilities, has insufficient human resources to achieve the required levels

of control.. This results in insufficient levels of control, significant delays in procedures and a level of illegality

estimated at 50 % of the harvested volume. While ABT does its best to improve its control of the situation with new

technologies (for example, digital CFOs) and alliances (the military instead of the police) not even its current limited

budget is guaranteed and is likely to be significantly reduced in the coming years.

13. There are other relevant institutions in the Bolivian forestry sector, which include sectoral institutions (CFB, CANEB,

CADEX), certification bodies (IBNORCA, SW/RA), universities (IBIF, University de la Cordillera), NGOs with experience

in community forestry and/or conservation projects (FAN, WWF-GFTN, FCBC, TNC, ICCO, SNV, TAA among others)


43

and donors (EU, FAO, US-AID, specific Embassies) and combinations of the former groups (like the TTF platform).

Their general opinion on a VPA process is positive.

14. There is a considerable number of legal requirements to be complied with, the control of which depends on quite a

variety of different authorities (ABT, Tax Department, Ministry of Labour, Municipality, SENASAG). While the

impression exists that in general their inspections have a certain regularity and consistency, there are major

differences between the experiences of specific companies, which may be attributed to a lack of capacity (human

and/or financial) to implement an adequate control.

15. All companies interviewed in Bolivia33

are legally registered and consider that they are functioning legally. However

there are several aspects that require attention (e.g. staff contracts, requirements for subcontracted companies,

requirements for suppliers) before a VLC (Verified Legal Compliance) level will be reached. Among the companies

interviewed those that are already FSC certified are the most advanced.

16. Eight out of nine companies interviewed in Bolivia considers that they will have to comply with the legality

requirement of the EUTR, passed on to them by the importers in the EU. While one quarter considers that not much

will change for them as they are FSC certified, half of the companies are considering applying for VLC certification in

the short term (and possibly FSC in the medium term). Only one company is considering withdrawing from the EU

market.

17. The Bolivian forestry sector has several strengths that may be of help in consolidating its position in the

international market in general and in the EU market in particular: an abundance of available raw material, years of

experience with sustainable forest management and FSC certification, a large production potential, a surplus of

installed processing capacity, many exporting companies that are already working legally, and, finally, the presence

and/or experience of renowned certification bodies and the support of institutions, among others.

18. The creation of an entirely legal forestry environment through a VPA process is in the interest of all. The mission

considers that a VPA makes sense in the case of Bolivia because it will facilitate the improvement of the institutional

capacity of the sector, put an end to unfair competition from the informal sector, facilitate the participation of

communities, small and medium companies in exporting, promote transparency in the sector, position the country

at international level, help the GoB to recuperate income from taxes and fees that it should collect and, additionally,

it lies comfortably within the political framework of the GoB (defined in the National Development Plan).

19. The majority of the stakeholders interviewed in Bolivia agree that, in the long term, the signing of a VPA would be

advantageous for Bolivia. They have a wide range of arguments to substantiate this opinion and some concrete

advice to take into consideration in order to achieve it. They consider that the process will take between 3 and 5

years and agree that it will be very important that all stakeholders of the sector are involved in the process.

20. Financial and technical support for the FLEGT/VPA process, either directly through the EU or bilaterally through the

member countries and donors, will be of primary importance to achieve the required institutional strengthening.

Amongst the (co-)financing alternatives the following can be mentioned:

1) The General Development Cooperation Programme between the EU and Latin American countries for the

period 2014 – 2020;

2) The Fund “Forestry Facility” of the FAO in Bolivia, established at the Vice Ministry of Environment (300,000.- US

$/ year);

3) Donors that participate in the environmental platform of donors in Bolivia.

33

It is stressed that this is not a valid statistical sample, but a small sample that only represents 22% of the export of timber (products) to the EU market.


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7.2 Recommendations

1. The following strategic focus is recommended for the sector:

• Short term: focus on:

1. VLC verification (medium-size companies, not yet certified companies)

2. FSC Certification (big companies, already certified companies)

For the majority of the companies this means that they will focus on the VLC level which is the most feasible to

achieve in the short term.

• Medium/long term: focus on a VPA process (small companies, communities)

2. In general the sector is as well suggested to focus on the creation of value added and avoid the further increase of

the volume of low value products, which tends to deplete resources and at the same time does not significantly

contribute to the GDP and employment.

3. It is suggested that the EU make available, in the short term, all relevant official information (including videos,

reports, folders, experiences from other countries) to the different authorities in Bolivia, in order to enable them to

have sufficient information to start fruitful internal discussions on the topic.

4. At the same time it is suggested that the TTF, in coordination with the environmental group of the donors, organize

several informative events and facilitate a flow of adequate information to the other stakeholder groups already

identified in this mission report. Such an awareness campaign involves the development of clear messages and

materials (e.g. folders, posters, PowerPoint presentations) relevant to the level of communication and

understanding of the specific target groups.

5. TTF is recommended to strengthen itself institutionally and extend its cover in the country, looking for participation,

support and acknowledgement by other relevant organizations in the forestry sector, so that it will be able to

function as a national platform for the Bolivian forestry sector and adequately assume the role of information

and/or training centre.

6. In the event of the GoB deciding in favour of a VPA process, it is recommended that the VPA process be initiated in

such a way that the GoB will be the leader of the process, with the backing of the donors and the EU, in order that

the GoB may acknowledge the process as its own initiative, thereby creating “ownership”, a basis for political

support and sustainability. In such a case the other stakeholder groups are suggested to cooperate with the GoB and

actively participate in the different steps of the process, whenever requested to do so. NGO’s may e.g. become

involved in supporting stakeholder consultation processes at remote locations, while TTF may e.g. support further

awareness creation or streamline and promote standard procedures in the sector. The EU and the donor group shall

monitor the quality of the process and where relevant finance and/or implement support activities to guarantee the

required process quality.

7. It is recommended that the CBI support the companies associated to the Export Coaching Programme through a

sub-program of “Support to Verified Legal Compliance”. CBI is advised to negotiate a discount (because of the

number of companies) with possible certification bodies (SW/RA, SGS). In future CBI might consider requiring

companies that are interested in joining the ECP program to enrol in a VLC verification process as prerequisite.

8. In the event of the GoB finally deciding to develop a VPA process, it is recommended they use the checklist

presented in Annex 10 and focus at least on all exported timber (products), independently of the destination (EU or

other places); it would be even better to focus on all products of the sector, including those of the internal market.

*****